Medicare Supplements insurance or Medigap plans are available to fill some of the holes in original Medicare. Medicare insurance has deductibles and co-insurance that can cost an individual a lot of money.
Medicare Supplement insurance plans are sold by Third party insurance carriers. These companies are regulated by the individual states.
Medicare Supplement insurance plans became standardized in the 1980’s. What this mean is that a Plan G covers the same Part A and Part B as every other carrier.
How many Medicare Supplement plans are there?
You will see in many places that people say there are 10 or 11 Medicare Supplement Insurance plans. They are wrong. As of January 1, 2020, there are 12 different Medicare Supplement Insurance plans sold in most states.
Now that you know there are 12 Medigap plans in most states, how do you know what each cover. First, a Medicare Supplement plan will not cover anything that Centers of Medicare and Medicaid does not approve the billing code for. Medicare does not cover everything. Sometimes you will see a bill and not understand why your Medicare Supplement insurance plan denied covering the charge. No carrier will pay anything that Medicare did not approve, it is not the insurance carrier trying to not cover something. Second, you most know that all providers send the billing to Medicare first. After Medicare approves or declines the service; Medicare sends the Bill over to the insurance carrier to cover the portion they are supposed to pay. Third, if a doctor or Hospital takes Medicare Part A and Part B then they take any Medicare Supplement insurance plan and carrier that legally sells that plan. Many insurance agents try to tell you this is not the case. Many just do not know better.
So, what Plan do I go with? Well, most people are only going to look at two Medicare Supplement plans, we will show three because people need to know of an option that many never talk about. (we, will explain why many agents never show the third Medicare Supplement plan.)
- Plan G is the name of the first Medicare Supplement Insurance plan. This plan covers all Medicare approved charges except the Part B deductible for that year. This Deductible changes almost every year and is only changed by the Government agencies. This deductible is for all of your doctors combined.
- Plan N is the name of the second Medicare Supplement Insurance. Plan N has a lower premium than Plans G. Additionally, the only out-of-pocket expenses beyond the monthly premium are Part B deductible, up to a $20 copay for office visits and a $50 copay for a trip to the ER and Part B excess charges if applicable.
Plan N is normally 28% to 33% less expensive than Medicare Supplement Plan G. Plan N generally also has lower yearly rate increases because the insured pay a portion of the Part B charges.
The up to $20 copay is not normally charged at the doctor’s office. Why? Well the doctor does not know what to really charge. The Part B deductible must be met first and secondly the Doctor can not charge you more that the 20% after the Part B deductible is met.
See examples on how Plan N Medicare Supplement works when the Part B deductible is met
Example 1: Insured owes $20
- Doctor sends a $200 bill to Medicare
- Medicare approves the charge, but re-prices that billing code to $150
- Medicare pay 80% of the $150 ($120 was paid to the provider) and send the information the insurance company for them to pay what they are supposed to.
- Insurance carrier received the bill and sees that Medicare repriced to $150 and paid the doctor $120. They calculate the 20% and see that equals $30.00. Plan N has the insured paying up to $20. So, $30 – $20 = $10. The carrier pay the provider $10 and send the insured an explanation of benefits says that $20 is owed to that provider of the services rendered.
Example 2: Insured owes less than $20
- Doctor sends a $125 bill to Medicare
- Medicare approves the charge, but re-prices that billing code to $90
- Medicare pay 80% of the $90 ($72 was paid to the provider) and send the information the insurance company for them to pay what they are supposed to.
- Insurance carrier received the bill and sees that Medicare repriced to $90 and paid the doctor $72. They calculate the 20% and see that equals $18. Plan N has the insured paying up to $20. The carrier pays the provider $0 and send the insured an explanation of benefits says that $18 is owed to that provider of the services rendered.
- The Doctor receives the $72.00 from Medicare and a notice saying Insurance owes the remainder of the $90. They bill the insured the $18. They legally are not allowed to balance bill up to the $125 original bill. They are only legally allowed to collect up to the $90
- Plan High Deductible G (HDG) is the name of the Third Medicare Supplement Insurance plan. The High Deductible is best understood as a Max out of Pocket. This Deductible is on the Medicare Supplement and not on Medicare. It works differently than Under 65 major Medical plans. This plan is not really talked about. Why? Three reasons for this
- Premiums are so low that most insurance agents do not really want to learn about them. Generally speaking, the higher the premium on a Medicare Supplement insurance plan the more the insurance agent gets paid. Because these premiums are about 130% less than Plan G and 81% less than Plan N. Insurance agents do not want to learn about these plans.
- Not all carriers have HDG. Not because they are bad plans, but because many are not sold. It is part of the Supply and Demand. We have access to a number of carriers that have these High Deductible plans.
- Most insurance agents do not understand how they work.
These Deductibles go up every year as set by the government. On average the deductible goes up $40 a year. The Deductible for 2020 is $2,340. REMEMBER!!! That Medicare pays first. So, the bill goes to Medicare first and then to the carrier to see what the insured would need to pay. One carrier says that the Average insured between 65 and 80 pays less than $700 a year in Part A and Part B services on top of their monthly premium.